Opportunity for small and medium businesses: how private investors can help you buy your own home

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The dream of owning a home is getting more and more expensive. Rising mortgage rates are making it harder for the middle class to buy their own home despite a high enough income. This is also reflected in the bare figures: only 37 percent of the approximately 4.7 million houses and apartments in Switzerland are owned by residents. For comparison: in France it is around 58 percent.

But the desire to buy property has not waned, Gabrielle Wanzenried, professor at the Vaud University of Applied Sciences and Management, told French daily newspapers “24 Heures” and “Tribune de Genève”. A new study by HEIG-VD and real estate startup Evahomes shows that between 80,000 and 100,000 Swiss people are interested in alternative financing options for real estate.

We target the upper middle class

The study also calculated potential buyers of such offers: These are working people with incomes of 130,000 to 215,000 francs and savings of 120,000 to 300,000 francs. Right now, it’s particularly frustrating for this target group to make a purchase out of reach due to rising interest rates.

“It is service industry managers or graduates for whom it would actually be realistic to buy real estate because of their income,” says Tafsir Ba, CEO of Evahomes. “However, they lack justice or grace such as inheritance.” His start-up aims to remedy this situation: It’s private investors, not big financial institutions, who should finance the acquisition.

Still more expensive than bank loans

As Ba explains, they either supplement the buyer’s equity or buy the property on behalf of the future owner using the lease model. The money is funded by organizations called “Family Offices” that manage large assets owned by private individuals or wealthy investors.

A big disadvantage of this is that investors’ interest rates are quite high compared to bank loans. It can go up to seven percent instead of three percent as in many banks. Still, Ba finds the model useful. Banks have become more restrictive in giving home loans. Today, they demand higher equity and assess borrowers’ ability to repay at higher interest rates.

Ba is confident that the potential exists despite the steep rise in property prices. In any case, his own work proves that he was right. However, he has to admit that some concessions and moving away from Swiss centers are still necessary today to find suitable property. (Snap)

Source :Blick